‘Paranormal’ Now the Most Profitable Film Ever

“This will definitely echo around the halls of Viacom in New York,” said Don Harris, executive VP of distribution for Paramount on Sunday, shortly after it was announced that “Paranormal Activity” would lead the weekend box office with $22 million.

Harris’ jubilation was understandable.

Set to further expand its run this weekend from 1,945 locations to around 2,400, and having grossed $65.1 million through Wednesday on a sub-$15,000 production budget, “Paranormal” has already exceeded the film it is most often compared to, “The Blair Witch Project,” as the most profitable movie of all time.

“Blair Witch’s” $248.6 million worldwide haul a decade ago – juxtaposed against its $60,000 production costs – represented an almost unthinkable 414,233 percent return on investment.

Doing the same basic ROI math on “Paranormal” (65.1 million minus 15,000 divided by 15,000 times 100) yields an equally unfathomable result of 433,900 percent.

Harris was perhaps as relieved as he was giddy Sunday that the distribution strategy for the film fulfilled the hype surrounding Paramount’s viral marketing campaign.

The little film picked up steam in late September when a social-media initiative helped it make an impressive $77,900 out of a dozen midnight shows.

Almost from the beginning, Harris said he and his team resisted industry pressure to roll the movie out wide faster.

Since Paramount had spent less than $10 million to create awareness for “Paranormal,” Harris believed that a slow, methodical roll-out would be better.

“Everybody else thought we should be going faster than we were,” he told TheWrap. “But I thought we were doing a pretty good job of seeding the ground as we went. I don’t know that we would have done a lot more last weekend if we would have added a bunch of runs then.”

Indeed, while increasing venues from 12 to 33 to 160 to 760 to last weekend’s 1,945, “Paranormal’s” platform expansion was even more gradual than that of “Blair Witch,” which went from 27 to more than 2,000 in a span of four weeks in the middle of the 1999 summer blockbuster season.

“Once we went to over 2,100 theaters, the existing locations started to take a big hit,” noted a distribution official who worked under the late Steve Rothenberg, the Artisan Entertainment distribution president who masterminded “Blair Witch’s” rollout strategy.

That’s true: “Blair Witch” didn’t start seeing declining box-office returns until its fourth week, when it rolled out to 2,142 North American theaters, dropping 16.6 percent from the previous end-of-July weekend, when it was in 1,101 locales.

“Once we rolled out to that many theaters, the craziness surrounding the movie — people seeing it as more of an event than just a film — began to die down,” the former Artisan official added.

For its part, “Paranormal” is finally expected to see its own week-to-week decline, with tracking projections for the coming weekend set at around $15 million.

Still, regardless of whether its spectacular run begins to ebb this weekend, given the recent cash situation at Paramount – the studio notably pushed back the premiere of its Martin Scorsese-directed “Shutter Island” from October to February because of a lack of promotional wherewithal in fiscal 2009 – “Paranormal” has already proven to be a game-changer.

“For Viacom, this movie is probably more important than one that does $300 million or $400 million,” Harris added. “That’s not even mentioning all the free cash flow it’s going to generate.”